Who Pays When Tax Administration Improves? Revenue, Compliance, and Behavioral Responses to Georgia’s Large Taxpayer Office

Jean-Marc Atsebi, Mikheil Chikviladze, Mitali Das, Elguja Loliashvili and Mona Wang

No 2026/031, IMF Working Papers from International Monetary Fund

Abstract: In 2021, the Republic of Georgia established a Large Taxpayer Office (LTO) to strengthen tax administration and improve compliance among firms that contribute a disproportionate share of revenue. This paper draws on that quasi-experiment to estimate the causal impact of intensive oversight, with no change in tax rates, on taxpayer behavior and revenue collection using administrative data from 2017–2024. Our study exploits both the 2021 introduction of the LTO and the revision of eligibility thresholds in 2024. Estimating a weighted difference-in-differences design, we find that LTO assignment raised annual tax assessments by about 0.4–0.7 percent of GDP, concentrated in VAT and withholding taxes. When we examine the channels, we find that the LTO raised compliance by combining targeted enforcement with improved taxpayer services, while audits became fewer but more selective. The impacts are largest in sectors with strong third-party reporting and high transaction traceability. Our findings underscore that reforms to tax administration can deliver significant gains in fiscal capacity, generate fiscal space, and support development.

Keywords: Compliance; Enforcement; Large Taxpayer Office (LTO); Revenue Mobilization; Taxpayer Services; Lto assignment; Lto taxpayer; IMF working papers; Lto firm; Lto cohort; Fiscal Affairs Department of the International Monetary Fund; Large taxpayer office; Tax assessments; Value-added tax; Tax administration core functions (search for similar items in EconPapers)
Pages: 45
Date: 2026-02-20
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